Study Guide to Man, Economy, and State with Power and Market

Chapter 9: Production: Particular Factor Prices and Productive Incomes 109
Chapter Outline
1. Introduction
This chapter analyzes the effects of a changing economy on
specific factor prices.
2. Land, Labor, and Rent
A. Rent
Rent is the price paid for the hire of unit services of a
factor; the price for a durable factor in its entirety is (in
the ERE) equal to the present discounted value of its
future rents. Net rents are equal to gross rents earned
minus gross rents paid to owners of factors (necessary to
produce a capital good). In the ERE, only land and labor
factors earn net rents, because a capital good’s gross rent
is entirely imputed to the land and labor factors (plus
time) necessary for its construction. A wage is simply the
hire price of a unit of labor service. The capitalized value
of the “whole factor” in the labor market implies slavery,
and hence cannot exist on a free market. It is an important
empirical fact that labor has tended to be scarcer
than land; this is why there are always plots of submarginal
land but not submarginal (“unemployable”) labor.
B. The Nature of Labor
There is no difference between “management” and
“labor”; both are hired by the capitalists to perform certain
tasks. Yet no one suggests unionizing the vice presidents
in various firms to protect them from exploitation.